Why is Lloyd’s banking group undervalued so much compared to it’s intrinsic value?

Lloyds Banking Group's stock appears to be undervalued compared to its intrinsic value for several reasons:

1. Historical Performance: Lloyds' shares have experienced a significant decline, losing 94% from their all-time high. This could have led to a lower perceived value, despite the potential for growth from the current low price.
2. Earnings Growth: Lloyds' earnings have shown significant growth, with a rate of 34.4% over the last year. This growth could indicate a strong fundamental base that may not be fully reflected in the current stock price.
3. Balance Sheet Concerns: Lloyds' high level of debt, with an equity-to-asset ratio of just 0.05, raises concerns about its financial stability and ability to sustain investments in areas like financial technology.
4. Dividend Yield: Lloyds offers a high dividend yield of 5.5%, which could be attractive to income-focused investors.
5. Market Conditions: The overall banking sector is sensitive to economic cycles, and Lloyds' performance is likely influenced by broader economic trends. The UK economy's performance and interest rate expectations also impact the bank's net interest margin.

In conclusion, while Lloyds Banking Group's shares are undervalued by some metrics, such as its low price-to-earnings ratio, the high level of debt on its balance sheet and the potential for economic headwinds may limit its appeal to value investors. The decision to invest in Lloyds should be based on a thorough analysis of the company's financial health, growth prospects, and the prevailing economic environment.